The topic that i like the most in Economics class is Topic 3 &4: Price Theory (Supply & Curve). Based on the theory described in this chapter, i understand that the curve for buyer (demand) and supplier (supply) is totally different in the way that the graph drawn is totally opposite. According to the Law of demand, it states that the cheaper the price, the more the demand; whereas the Law of Supply states that the more expensive a product is, the more the supplier would supply. This 2 laws tells me that the economy would always achieve equilibrium in some state.
The topic that is most useful is Topic 7: Monopoly & Oligopoly. This 2 chapters make me understand the market competition of the world and describes the characteristics of the these type of market. Now i understand that the market is controlled by these 2 types of firms. For example, Bill Gates is the best example of a Monopoly where he controlled the whole market as his company is the only one that produces the Microsoft products. This enabled him to set higher price of his product to earn more profits and this is the benefits of a monopoly because people would still buy their products even though the price is relatively high.
Tutorial Exercises Topic 1.0
1.1. What is the definition of Economics?
- Economics is a study of how individual or economies make decisions about the use and allocation of their scarce resources.
2. 2. What is the meaning of scarce resource? Provide 3 examples of scarce resource (other than time & money).
- Scarce resources are limited resources. Examples: Money, spirits, trees.
3. 3. Why is the management of scarce resource important?
- Because scarce resources will be finished in one day at future if we do not manage to use it well.
4. 4. Identify and explain the 2 types of economics. Can you give one example for each type of economics?
- Microeconomics – Ali’s family spend about RM100 on food a day.Marcoeconomics – Malaysia collected about RM148 billion for tax income in year 2010.
5. 5. What are the 2 methods of studying economics? What does each method involve?
- Positive economic – attempts to understand how economic systems work or behave without making judgments.
Normative economic – attempts to find out If an economic outcome or behavior is good
or bad, and whether they can made it better.
or bad, and whether they can made it better.
6. 6. What is an opportunity cost?
- An opportunity cost is the 2nd choice that you give up when making a decision.
7. 7. For each of the following situations, describe the potential opportunity cost(s):
· Studying for your economic test
· Driving to Sunway Pyramid to buy a Wii Console and games
· Buying a new car instead of taking the bus to work/study
· A company spending an extra $10 million dollar for research
· Asking girl/guy A out for a date.
a) Girlfriend will think that I do not care about her.
b) Waste a lot of time to study for exam.
c) I have to spend a lot of money for petrol in the future.
d) Company will lose $10 million dollars to reward as bonuses to good workers.
e) I will less closer to another girl.
8 8.Draw a Production Possibility Frontier (PPF) graph with the Y-axis for product A, and X-axis
f or Product B. Designate 2 points (C & D) on the curve.
f or Product B. Designate 2 points (C & D) on the curve.
a. What are the different quantities of product A and B produced at point C and D? What principle does point C and D illustrate?
b. Please designate a point (E) to show resources being used inefficiently. Give 2 examples how this inefficiency can occur.
c. Designate one more point (F) outside of the curve. What does this mean? How can a firm’s PPF grow to that point? Give 2 examples.
d. Draw a new PPF graph for a growing firm (over the years).
9. 9. One of the economic principles states that “People respond to incentives.” Explain this principle and provide a relevant example.
- People respond to incentives states that something changes on environment will causes a change for a decision.
Example : Ah Meng wants to buy a pair of shoes with the brand named Shalala, but Ah
choi tells him that the quality of shoes for the brand is not good, therefore Ah Meng changes his decision to buy other brands of shoes instead of buy the Shalala brand’s shoes.
choi tells him that the quality of shoes for the brand is not good, therefore Ah Meng changes his decision to buy other brands of shoes instead of buy the Shalala brand’s shoes.
1 10. Explain what a free market (or capitalistic economy) means? Planned economy? What about
a mixed economy?
a mixed economy?
- Free market or capitalistic economy means that people have freedom to start their own business. In Planned economy, everything is decided by government such as what to produce and what to sell. It controls all the factors of production. However, mixed economy is combined by 2 systems which is capitalistic economy and planned economy. Although you are free to start your own business and sell the products that you want, but you are still under controlled by government as which products you can or cannot to sell.
- The demand equation for strawberries in the
2. Explain the law of demand.
Law of demand states that as the price of a product increases, the quantity
demanded will become lower and vice versa.
demanded will become lower and vice versa.
3. What is the difference between an individual demand curve and a market demand
curve?
curve?
The difference is that individual demand curve is only for an individual while market demand curve is the demand for the whole market.
4. When you draw a simple downward-sloping demand curve, what assumptions are you making about the other factors (e.g. income of buyers, product popularity, etc.) that can affect demand?
Income of buyers will affect the demand curve because if the income of buyers are lower the lesser the product they will buy and this will affect the curve. If the product popularity is low the buyers will not buy the product and this affect the demand curve.
5. A higher price for the product induces a lower demand. Why is this so? Explain.
When a price of a product is high, buyers will choose to buy other product that has a lower price this induces a lower demand.
6. For each of the situation below, identify the factors at play and draw the graph
showing their effects on the demand curve of microwave meals:
showing their effects on the demand curve of microwave meals:
a) Microwave meals become less fashionable.
b) The price of its substitute (say, fast food) increases.
c) Income falls and microwave meals is an inferior good
d) Consumer believe that the price of microwave meals are going to increase in the
near future
near future
e) The price of its complementary products (e.g. ketchup, salt, pepper) decreases.
7. Explain the effect of number of buyer on the demand of a product.
The more the number of buyer the higher the demand of the product because everyone will be competing to get the product and this increase the demand of the product.
8. What do you call goods whose quantity demanded rises when income increase and vice versa? Can you give 2 examples?
Those are called normal goods examples are branded fashion and cars.
9. What are complementary goods? What happens to the demand of a product when its complementary good experience a price hike? Why? Can you give an example of complementary goods?
Complementary goods are goods that need to use with another product. The demand of a product will decrease when its complementary good experience a price hike because if they want to use the product they need to buy its complementary goods that its expensive. Example of a complementary goods are guns and bullets.
10. What are substitute goods? What is the relationship between the demand of a
product and the price of its substitute? Why? Provide 1 example of substitute goods.
product and the price of its substitute? Why? Provide 1 example of substitute goods.
Substitute goods are goods that can replace one another. The higher the demand of
a product will be if the price of its substitute goods are higher then itself because
people will choose to buy the cheaper good. An example of substitute good is beef
and chicken.
a product will be if the price of its substitute goods are higher then itself because
people will choose to buy the cheaper good. An example of substitute good is beef
and chicken.
11. Can you think of a product whose demand goes up as its price increases? Explain
why does the law of demand does not apply to this product.
why does the law of demand does not apply to this product.
Products like antics whose demand goes up as its price increases. Because antics
are limited and there are no production of it.
are limited and there are no production of it.
Economics Presentation
Presentation about how Superhero Comics affect the world's economy:
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